Red Cross Experiments With A Very Different Money Remittance Approach

When Red Cross workers are helping with disaster relief in the middle of war-torn areas or natural disasters, the last thing they need to deal with are money-transfer headaches to secure critical supplies and services. Enter WorldRemit Ltd., which gets those humanitarian aid workers the cash they need through laptops or mobile devices, to more than 100 destinations and 35 countries, the Wall Street Journal reported Wednesday (Aug. 6).

The idea is that aid workers could get the funds as cash delivered by a courier, beamed into a mobile wallet or as a local bank deposit, the Journal said.

The approach is challenging because of the decidedly harsh physical and environmental conditions these workers—by necessity—are working in, places where infrastructure is often challenged. Natural disasters—as well as wars—can also impact telecommunications, which will make any communications difficult.

“It is among the first money transfer businesses with the capability to send money to mobile wallets now in talks to develop partnerships with international aid groups. And it previously aided the Red Cross’ response to Typhoon Haiyan in the Philippines and to the Westgate Mall attack in Kenya,” the Journal said. “After the Westgate Mall attacks in Nairobi last September, the Red Cross set up a mobile wallet account with M-Pesa, a Kenyan mobile money transfer system run by network operator Safaricom Ltd, part of the Vodafone Group. This generated a local M-Pesa number that only users of Kenyan mobile networks could text in order to donate. In partnership, WorldRemit allowed its users to send money instantly from international bank accounts to the Kenyan M-Pesa number of the Red Cross’ mobile wallet. The Red Cross could then cash out the money from the mobile wallet at local M-Pesa vendors.”

Beyond infrastructure impediments, transferring money to local banks is only effective if those local financial players are able to function given the emergency that prompted the Red Cross team’s arrival.

There are also the pragmatic realities of finance in these challenged areas. Low-cost money transfers—which is what WorldRemit is trying to deliver—can be difficult in some parts of the world where the local players are used to charging very high money transfer rates.

“A difficulty for many aid organizations is in establishing connections with local financial institutions and the cost of moving money from their bank accounts (often located outside the region) to mobile wallets” the story said is “a growing phenomenon in areas like east Africa, where mobile penetration is high and traditional bank account uptake is patchy. Such movement can typically result in the loss of as much as 20 percent of the money being transferred.”



The pressure on banks to modernize their payments capabilities to support initiatives such as ISO 20022 and instant/real time payments has been exacerbated by the emergence of COVID-19 and the compelling need to quickly scale operations due to the rapid growth of contactless payments, and subsequent increase in digitization. Given this new normal, the need for agility and optimization across the payments processing value chain is imperative.

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